À̹ÌÁö È®´ë Funds investing in global sub-investment grade and riskier securities are gaining popularity among Koreans amid little profit-making assets.
According to Seoul-based financial data provider FnGuide on Wednesday, 31 high-yields funds available in Korea have attracted fresh investment of 1.4 billion won ($1.2 million) in the past week to bring the total assets under management to 986.1 billion won.
A high-yield fund promises higher returns while carrying higher risks by investing in corporate debts with lower credit ratings - rated Baa or lower by Moody`s Investors Service or BBB or lower by Standard & Poor`s.
The 31 high-yield funds in trading in Korea have yielded 9.5 percent on average this year, whereas average savings offer an interest rate of less than 2 percent in Korea.
¡°An annual return of 6 to 7 percent on investment in high-yield funds is possible even during the economic slowdown unless the world is hit by another financial crisis similar to the one in 2007-2008,¡± said an asset manager. ¡°More are less fretful of global financial risks as central banks across the world have been taking preemptive monetary easing actions,¡± he added.
Among the 31 high-yield funds traded in Korea, Alliance Bernstein¡¯s global high-yield fund has the largest 447.4 billion won assets under management. It also has performed the best, yielding 10.38 percent so far this year. The second largest is Alliance Bernstein¡¯s monthly distribution global high-yield fund with 292.8 billion won. Its return for this year is 10.1 percent. The fund with the lowest return is Hanhwa¡¯s monthly distribution short-term high-yield fund but even that has yielded 4.01 percent this year.
Investment experts, however, advise investors to take more caution on high-yield funds because these corporate bonds easily fluctuate depending on external market factors such as the direction in the U.S-China trade dispute.
By Park Eui-myung and Cho Jeehyun
[¨Ï Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]